Normally, certain areas of the stock market tend to outperform when a new cyclical bull market begins.

But this year is different.

From Ned Davis Research, this week’s chart shows the average performance of the ten stock market areas that typically rise the most in the early stages of a bull market. The blue line shows these early cycle leaders’ average performance after a bull market begins. The red line is this year.

As you can see, it is lagging the average. The blame lies with the poor performance from those areas most affected by the Covid-19 pandemic.

Take Financials, for example. Banks love an upward sloping yield curve, where they can borrow at low short-term rates and lend at higher long-term rates. But with the Fed committed to keeping rates low and the yield curve flat, it has drastically hampered the financial sector’s earnings prospects.

This isn’t your typical bull market.

 

This is intended for informational purposes only and should not be used as the primary basis for an investment decision.  Consult an advisor for your personal situation.

Indices mentioned are unmanaged, do not incur fees, and cannot be invested into directly.

Past performance does not guarantee future results.